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First-Time Homebuyers May be Eligible for Credit

BY Kim Mattila-Kasten
01/20/2014 - 3:17pm

First-time homebuyers in Wisconsin may be eligible for the WHEDA Tax Advantage Mortgage Credit Certificate (MCC) Program.   For qualified applicants, this program provides a special tax credit which reduces the homebuyer’s federal income tax liability.   The credit is based on annual mortgage interest and is claimed when filing the federal individual income tax return.  A summary of the credit is below.

Credit – Through the MCC Program an annual tax credit of 25% of mortgage interest can be claimed.  There is a maximum annual credit of $2,000 per year.  The credit may be claimed for the life of the loan, up to 30 years on the original mortgage.    For homebuyers who purchase properties in target areas or who are qualified veterans, the credit can increase to 40%.  The program is available to borrowers through financing from the lender of their choice provided that the lender is a WHEDA approved participating lender.

Borrower Eligibility – To qualify for the MCC Program a borrower much meet designated income limits, as well as purchase price limits.  These limits are broken down by county and apply to the area in which the property is located.   Applicants for the MCC Program are generally required to be first time homebuyers, however, exceptions to this requirement can include military veterans with an honorable discharge and applicants purchasing a home located in a HUD designated target area.

Property Eligibility – The MCC Program includes existing single family homes, condominiums, 2-unit homes that are greater than 5 years old, and acquisition rehabilitation.

Other - Purchasers are required to occupy the property for the life of the loan.  Loan terms are 15 or 30 years with fixed interest rates.   Note that the credit is subject to recapture if the property is sold within the first nine years of ownership.

For more detailed information, including a list of participating lenders, designated MCC income limits, purchase price limits, and target areas, please visit:

Http://www.wheda.com/root/BusinessPartners/MortgageLenders/Dynamic.aspx?id=3789&terms=first%20time%20credit